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MARKET REPORT: Naked Wines stocks are losing their lockdown sparkle

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Naked Wines became the last so-called “lockdown winner” to come back to Earth when its shares fell more than 40 percent.

The online wine retailer warned that sales could fall as much as 4 percent in the year to March 2023 and it could just barely break even in terms of profits. In a sobering update, the company highlighted “greater uncertainty” in the economy.

Nude shot through the pandemic as customers sitting at home signed up for home drinks delivery in droves.

Hangover: Naked Wines warned that sales could fall as much as 4% in the year to March 2023 and only just break even in terms of profits

Chief executive Nick Devlin had said Norwich-based Naked would be a winner in the long run, with the pandemic causing a “lasting shift in online demand”.

But shares are down more than 80 percent since last year’s highs as demand dried up at the end of the lockdown. It has issued a series of sales and profit warnings and limited the amount it spends chasing customers. Shares plunged 43.6%, or 125.3p, to 162.1p.

The crash will provide a big reward for hedge funds that had bet on a fall.

Naked has been one of the biggest targets of short sellers, who bet against a stock by borrowing and selling it with the assumption that its price will fall and that they can then buy it back cheaper and pocket the difference.

Devlin said Naked would not “pursue growth at any cost” as it continues to scale back investment in attracting new customers.

The bleak outlook came as Naked reported a 5 percent increase in sales to £350 million in the year to March 28. Earnings for the period were £2 million, reversing from a loss of £1.5 million a year earlier.

Stock Watch – Tandem

Tandem fell 20.8%, or 62.5 pence, to 237.5 pence after the trade boom it enjoyed during the pandemic ended.

The AIM-listed sports and leisure equipment company said the outlook for the remainder of this year remains “challenging.”

Trading in the 24 weeks to June 17 was 31% lower than last year, the company said.

Tandem’s bicycle division, which enjoyed unprecedented demand during the lockdowns, now has higher inventories after a 55% drop in sales.

Naked is just the latest business boosted by the pandemic that has since collapsed again. Others include AO World (down 2.9 percent, or 2.15p, to 71.55p), Ocado (up 4.3 percent, or 35.6p, to 855.4p yesterday), Asos (4.3 percent up, or 36.5p, to 896p on the previous day) and Deliveroo (up 0.5 percent, or 0.46p, to 88.24p on the day).

The London stock market plunged into the red again as investors worried about a global recession. The FTSE 100 fell 1 percent or 68.77 points to 7020.45 and the FTSE 250 fell 1.1 percent or 198.24 points to 18692.98.

Miners were on the slide as copper price — often seen as a gauge of economic strength — plunged to a 16-month low.

Anglo American fell 4.6 percent or 146p to 3061p, Rio Tinto fell 2.1 percent or 107.5p to 4911.5p and Glencore fell 1.5 percent or 6.55p to 442.8p.

The decline in copper prices came amid mounting fears that the global economy could slide into recession as rising inflation and higher interest rates hit households and businesses alike.

“As interest rates rise as part of efforts to curb demand, growth is in danger of disappearing,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown.

Rio Tinto was also hit by a downgrade by analysts at Morgan Stanley.

Among the mid-cap stocks, Trainline collapsed after the financial chief was looted by Boohoo.

Shaun McCabe, 53, who spent six years at the ticketing app, will step down in September to take over the same role at Boohoo.

Peter Wood, vice president of finance, will take over as interim chief financial officer while the company selects a successor.

The shake-up came as Trainline is fighting back from the pandemic. Last month, the company reported an 181 percent increase in annual sales. Shares fell 10.1 percent, or 32.1p, to 284.6p.

McCabe said he was “very proud of the company Trainline has become,” adding, “Now is the right time for me to take on a new challenge.”

However, the appointment did little for Boohoo stock, dropping 3.2 percent or 1.94p to 59.32p despite the announcement.

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